Summary:
Uninsured Employers' Fund (UEF) commenced action for indemnification of
benefits it paid to a worker of an uninsured employer. The worker suffered
a shoulder impingement condition which he alleged arose out of his employment
at a cabinet fabrication shop. The UEF accepted liability for his condition.

Held: The
UEF is entitled to indemnification. A preponderance of the evidence establishes
that claimant's shoulder impingement condition is an occupational disease.
Moreover, in an uninsured employer case, the uninsured employer has both
the burden of production and the burden of persuasion to show that the
claim was not compensable. The Workers' Compensation Court decision in
Garcia v. Uninsured Employers' Fund, 1998 MTWCC 53 regarding
burden of persuasion is overruled. In this case the employer satisfied
neither burden.

Topics:

Proof: Sufficiency.Unsworn
and unsupported accusations of an uninsured employer regarding causation
of a claimant's condition are entitled to no weight, especially where
the evidence indicates that the employer has attempted to evade workers'
compensation insurance requirements.

Proof: Causation. Where the sole
evidence concerning causation is in the form of a written opinion of
a physician, the opinion must be read in context. Where the opinion
is focused on distinguishing between an injury and occupational disease,
the physician's failure to use precise language regarding medical certainty
or medical probability is not fatal to a reading of the opinion as finding
causation.

Proof: Burden of Proof: UEF Cases.
Where an employer disputes the decision of the Uninsured Employers'
Fund accepting liability for a claim, the employer bears both the burden
of producing evidence and the burden of persuasion with respect to the
non-compensability of the claim. The Workers' Compensation Court decision
in Garcia v. Uninsured Employers' Fund, 1998 MTWCC 53 regarding
burden of persuasion is overruled.

Cases Discussed: Garcia
v. Uninsured Employers' Fund, 1998 MTWCC 53. Where
an employer disputes the decision of the Uninsured Employers' Fund accepting
liability for a claim, the employer bears both the burden of producing
evidence and the burden of persuasion with respect to the non-compensability
of the claim. The Workers' Compensation Court decision in Garcia
v. Uninsured Employers' Fund, 1998 MTWCC 53 regarding burden of
persuasion is overruled.

Uninsured Employers' Fund: Burden of Proof.
Where an employer disputes the decision of the Uninsured Employers'
Fund accepting liability for a claim, the employer bears both the burden
of producing evidence and the burden of persuasion with respect to the
non-compensability of the claim. The Workers' Compensation Court decision
in Garcia v. Uninsured Employers' Fund, 1998 MTWCC 53 regarding
burden of persuasion is overruled.

Uninsured Employers' Fund: Indemnification.
Where an employer disputes the decision of the Uninsured Employers'
Fund accepting liability for a claim, the employer bears both the burden
of producing evidence and the burden of persuasion with respect to the
non-compensability of the claim. The Workers' Compensation Court decision
in Garcia v. Uninsured Employers' Fund, 1998 MTWCC 53 regarding
burden of persuasion is overruled.

Uninsured Employers' Fund: Indemnification.
The Uninsured Employers' Fund is entitled to indemnification
from the uninsured employer where medical evidence establishes that
the claimant is suffering from an occupational disease and in any event
the uninsured employer failed to produce evidence to establish or persuade
the Court that the claimant's condition was not work related.

Appeals to Workers' Compensation Court:
Timeliness. Where, within the ninety days provided in section
39-71-520, MCA (1993-2003), an uninsured employer fails to appeal a
determination of the Uninsured Employers' Fund finding that a claim
is compensable, the uninsured employer is barred from thereafter litigating
that issue in an action by the Uninsured Employers' Fund seeking indemnification
from the employer.

Uninsured Employers' Fund: Indemnification.
Where, within the ninety days provided in section 39-71-520, MCA (1993-2003),
an uninsured employer fails to appeal a determination of the Uninsured
Employers' Fund finding that a claim is compensable, the uninsured employer
is barred from thereafter litigating that issue in an action by the
Uninsured Employers' Fund seeking indemnification from the employer.

¶1 The trial in this matter was held in Missoula,
Montana, on January 20, 2004. Petitioner was represented by Mr. Kevin
M. Braun. Respondent, Keith Grant, was represented by Mr. Dustin Chouinard.
The claimant was represented by Mr. Robert K. Ogg.

¶2 Exhibits: Exhibits 1 through 22 were admitted
without objection.

¶3 Witnesses and Depositions: Bernadette Rice,
David Raymond Stoneman, James Douglas Anderson, and David Wegan testified.
No depositions were submitted.

¶4 Issues Presented: The issues as set forth
in the Pre-trial Order are as follows:

¶4a Did David Stoneman have a compensable occupation
disease arising out of or contracted in the course and scope of his
employment with Keith Grant d/b/a Cabinet Shop?

¶4b If so, was Keith Grant d/b/a Cabinet Shop the
employer in whose employ Stoneman was last injuriously exposed to the
hazard of disease?

¶4c If so, was Keith Grant d/b/a Cabinet Shop and
[sic] "uninsured employer" at all time pertinent to David Stoneman's
occupational disease?

¶4d If so, is Keith Grant d/b/a Cabinet Shop statutorily
responsible for reimbursing the UEF for all benefits paid and to be
paid on David Stoneman's claim?

¶4e Alternatively, if Keith Grant d/b/a Cabinet
Shop is not responsible for David Stoneman's claim, should the UEF be
ordered to reimburse Keith Grant for his cost of suit and attorney's
fees in relation to this matter?

¶4f Alternatively, if Keith Grant d/b/a Cabinet
Shop is not responsible for David Stoneman's claim, should David Stoneman
be ordered to reimburse the UEF for all benefits paid to him or on his
behalf by the UEF?

(Pre-Trial Order at 2.)

¶5 Having considered the Pre-trial Order, the testimony
presented at trial, the demeanor and credibility of the witnesses, the
exhibits, and the arguments of the parties, the Court makes the following:

FINDINGS OF FACT

¶6 This case involves the claim of David Stoneman
(claimant). The claimant suffers from right shoulder impingement, which
he alleges arose during employment with Keith Grant (Grant). Grant was
uninsured and the claim was therefore submitted to the Uninsured Employers'
Fund (UEF), which accepted liability for the claimant's shoulder condition.
UEF now seeks indemnification from Grant.

¶7 Credibility questions are resolved in accordance
with the following findings of fact. I found the claimant credible despite
Grant's attack on his character.

¶8 Grant operates a cabinet shop in Missoula. Appropriately,
it is known as "The Cabinet Shop" (Cabinet Shop). Since it is a sole proprietorship,
I will hereinafter refer to its owner (Grant).

¶9 Over the years, Grant has maintained workers' compensation
insurance only sporadically. He was uninsured from January 1, 1994 to
September 17, 1996, again from December 13, 1996 to February 25, 1998,
and then again from March 12, 2000 until September 21, 2002. (Ex. 7.)
His shop foreman has an independent contractor exemption and claims that
he is "self-employed." Moreover, in a response to an unemployment
claim by the claimant, Grant told an investigator for the Unemployment
Insurance Division that all of his workers were "paid a % of the take
on the product and are self-employed." (Ex. 12 at 9.) These facts strongly
indicate that Grant has attempted to evade workers' compensation laws.
In that light, and in light of the fact that Grant chose not to testify
at trial, I give no weight to his accusations of fraud against the claimant.
The accusations are found in the exhibits in this case. They are uncorroborated
and unsworn, and there is good reason to doubt them.

¶10 Grant employed the claimant from 1996 through
early 2001. The claimant worked primarily as a sander although he also
did some other jobs. A coworker described the claimant as the best sander
he had ever seen, characterizing him as "a machine." The claimant's sanding
involved a great deal of movement of his right arm and his right arm experienced
a great deal of vibration from the sander.

¶11 In February 2000 the claimant experienced a snapping
sensation and pain in his right shoulder while installing a sled on a
table saw at work. However, the pain resolved after a couple of days and
the claimant did not seek medical care.

¶12 However, over the next several months the claimant
experienced renewed right shoulder pain. On September 28, 2000, his pain
became so severe that he could not pull the trigger on a drill.

¶13 On October 2, 2000, the claimant went to his family
physician for his shoulder pain. The claimant reported that his shoulder
pain has been bothering him for nearly six months
intermittently. It will start to bug him a little bit and he will take
it easy on it and it will go away for about a month or so and then come
back.

(Ex. 13 at 1.)

¶14 The claimant continued to work but with right
shoulder pain. Medical records of November 8, 2000, December 7, 2000,
and December 15, 2000, all indicate that he continued to have shoulder
pain, and on December 15, 2000, his physician ordered shoulder x-rays.

¶15 Because of his continuing shoulder pain, the claimant
was referred to Dr. Colin G. Sherrill, an orthopedic surgeon. Dr. Sherrill
first saw the claimant on January 8, 2001. At that time, the claimant
reported the following history:

HPI: David Stoneman is a 47yo
white male who presents for initial evaluation of right shoulder pain.
He initially had a shoulder strain-type injury while at work. He is
a cabinet maker. This occurred approximately a year ago and he states
the symptoms lasted for several weeks but then resolved. He then recently--in
the last three months--noticed the spontaneous onset of right shoulder
pain mostly superiorly and radiating down the lateral aspect of his
upper arm with no specific injury. He denies any previous problems,
denies any numbness, tingling, or sensation of weakness. He is right-hand
dominant.

(Ex. 14 at 2.) The history is consistent with prior
medical records and the claimant's testimony. Dr. Sherrill diagnosed "Impingement
of the right shoulder" and prescribed a Celestone injection into the shoulder
and a course of physical therapy. (Id.)

¶16 Despite the injection and commencing physical
therapy, eight days later the claimant was back to see Dr. Sherrill, complaining
that the effects of the shoulder injection had worn off and his shoulder
pain was as bad as previous. (Id. at 3.) Dr. Sherrill advised
surgery. (Id.)

¶17 Based on various statements made in connection
with a subsequent unemployment benefits application, sometime in January
the claimant got into a tiff with Grant over the filing of a workers'
compensation claim. Grant vehemently resisted his doing so. (See
Ex. 12 at 7.) The claimant proceeded to do so anyway: On January 29, 2001,
the claimant filled out and filed a claim for compensation with respect
to his right shoulder pain. (Ex. 1.) In his January 29, 2001 claim for
compensation, the claimant stated that his
shoulder had been bothersome for several months. On Sept. 28th
I was installing hardware into cabinets. My shoulder pain became so severe
I couldn't hold the drill.

(Id.)

¶18 On the same day he filed his claim, the claimant
quit work and reported Grant to the Fire Marshall for violations on fire
safety regulations governing the use of paint in the cabinet shop. (Exs.
1, 12, and 8.)

¶19 Since Grant was uninsured, the January 29, 2000
claim for compensation was forwarded to the UEF, which undertook an investigation
of the claim. The UEF initially agreed to pay benefits under a reservation
of rights, § 39-71-608, MCA. (Ex. 10.) It requested an opinion by Dr.
Sherrill concerning the work-relatedness of his shoulder impingement syndrome.
Bernadette Rice, the UEF's claims adjuster, apprized Dr. Sherrill of the
history reported by the claimant, and specifically of the claimant's report
of the February 2000 incident at work, the resolution of his pain shortly
after the incident, and the later onset of shoulder pain which led to
him seeking treatment in October 2001. (Ex. 9.)

¶20 Dr. Sherrill replied on March 15, 2001. He wrote
in relevant part:

In response to your questions on patient David
Stoneman, the radiographic findings usually develop over a long period
of time, i.e., in other words months to years, and the bone spurs that
I described do not occur with one specific injury. However, the irritation
of his rotator cuff certainly could have occurred with one particular
injury or motion as the rotator cuff impinged on these bone spurs. I
think the rotator cuff tendinitis and possible rotator cuff tear could
certainly develop with repeated activities such as may be a part of
being a sander.

. . . .

I think likely David is going to have troubles
performing his current job with his shoulder as it is. His first attempt
at seeking medical treatment was in October whereas the first time I
saw him was in January. His disability as a sander was most likely begun
sometime around the time of his visit with me, although I am not in
a position to more accurately determine that. I do feel that he is able
to perform certain occupations or certain activities, although repetitive
shoulder and arm use especially at or above shoulder level would be
very difficult for him and probably should not be attempted until he
is treated operatively.

(Ex. 11.)

¶21 The claimant underwent shoulder surgery on April
25, 2001, consisting of "arthroscopy of the right shoulder with debridement
of a partial thickness rotator cuff tear, subacromial decompression, and
distal clavicle excision." (Ex. 14 at 4.)

¶22 One of Grant's contentions is that the claimant
injured his shoulder in a water slide accident. The contention is unsupported
and I reject it. David Wegan, Grant's foreman at the time of the claimant's
employment, and who claims to have been "self-employed" despite working
as a "foreman", wrote a statement dated February 22, 2001, in which he
said that the claimant "complained about his shoulder hurting when he
came in one Monday after going to Fairmont Hotsprings swimming." (Ex.
5.) At trial, however, he recalled that the claimant had complained "just
a little bit" about his shoulder following some swimming. Then he said
he really could not remember anything about it and that he must have written
the statement at Grant's request.

¶23 James Anderson, another of Grant's workers, also
wrote a statement at Grant's request. In it he said that he "DID NOT WITNESS
ANY SPECIFIC ACTIVITY OR ACTIVITIES THAT RESULTED IN CONDITION OF CLAIMANT."
(Ex. 6, capitalization in original.) But at trial he testified that the
sort of work the claimant did "takes a toll after a while." (Trial Test.)

¶24 While Dr. Sherrill does not address the specific
criteria for an occupational disease, and might have been stronger in
terms of medical probability, his opinions must be read in context. In
context, he was addressing whether the claimant suffered from an injury
on a specific date (the February 2000 incident) or from an occupational
disease. He found it more likely that the claimant's condition was due
to long term occupational factors and not to a specific injury. Grant
has presented no contrary evidence.

¶25 Based on Dr. Sherrill's reply, on October 11,
2002, the UEF accepted liability for the claim as an occupational disease
but did so under a continuing reservation of rights pending the employer's
right of appeal. (Ex. 16.) On the same date - October 11, 2002, the UEF
also notified Grant of its determination of the compensability and his
right to appeal its determination within ninety days. The Court has no
record of a timely appeal. The present action was not brought by Grant
but by the UEF, and then not until July 11, 2003, nine months after the
UEF determination.

¶26 Since the information it received concerning the
claimant's reasons for quitting his employment on January 29, 2001, indicated
the claimant did not quit on account of his shoulder condition, the UEF
did not commence payment of indemnity benefits until March 15, 2001, the
date of Dr. Sherrill's letter. In that letter, Dr. Sherrill indicated
the claimant should not be performing his job at the Cabinet Shop. (Ex.
11.)

¶27 Subsequent to the claimant's shoulder surgery,
Dr. Sherrill disapproved the claimant's return to work in his old job
with the Cabinet Shop. (Ex. 19 at 5.) A vocational analysis determined
that jobs in which he might be placed without retraining pay $6.50 to
$7.50 an hour in comparison to his $10.00 an hour wage at the Cabinet
Shop. Following that determination, on March 24, 2003, the UEF began paying
the claimant biweekly benefits under section 39-72-705, MCA, noting that
it might have to redetermine those benefits based on the ultimate decisions
on appeal in Stavenjord and Schmill. Section 39-72-705,
MCA, provides for up to $10,000 in occupational disease cases where the
claimant suffers permanent disability but is not permanently totally disabled.
In Stavenjord v. Montana State Fund, 2003 MT 67, 314 Mont. 466,
67 P.2d 229, the Supreme Court held that a claimant suffering from an
occupational disease is entitled to the permanent partial disability benefits
available to workers suffering work-related injuries if those
benefits are greater.

¶28 As of the date of trial, the UEF had paid a total
of $34,945.74 in medical and indemnity benefits. It estimated its remaining
liability at $9,313.0 for permanent partial disability and medical benefits.

CONCLUSIONS OF LAW

¶29 This case is governed by the 1999 version of the
Montana Occupational Disease Act (MODA) since that was the law in effect
at the time the claimant's condition was diagnosed and he filed his claim.
Fellenberg v. Transportation Ins. Co., 2004 MTWCC 29, ¶ 36 and
see Buckman v. Montana Deaconess Hospital, 224 Mont. 318, 321,
730 P.2d 380, 382 (1986).

¶30 At the time the claimant's shoulder condition
became symptomatic, at the time it was diagnosed as an occupational disease,
and at the time the claimant filed his claim for compensation, Keith Grant
was uninsured.

¶31 On October 11, 2002, the Department of Labor and
Industry (Department) made a final determination of compensability of
the claim in this case. On that date it notified Grant of its determination
and his right to appeal within ninety days. That right to appeal is governed
by section 39-71-520, MCA (1993-2003), which provides:

39-71-520. Time limit to appeal to mediation
-- petitioning workers' compensation court -- failure to settle or petition.
(1) A dispute concerning uninsured employers' fund benefits
must be appealed to mediation within 90 days from the date of the determination
or the date that the determination is considered final. (2)(a) If the parties fail to reach a settlement
through the mediation process, any party may file a petition before
the workers' compensation court. (b) A party's petition must be filed within 60 days
of the mailing of the mediator's report provided for in 39-71-2411 unless
the parties stipulate in writing to a longer time period for filing
the petition. (c) If a settlement is not reached through mediation
and a petition is not filed within 60 days of the mailing of the mediator's
report, the determination by the department is final.

Under this section, the Department's determination
of compensability was final unless Grant appealed the determination within
the time limits set out in that section. The Court has no record of any
such appeal by Grant and there is no evidence that an appeal was ever
filed. The UEF's October 11, 2002 determination that the claimant suffered
a compensable injury entitling him to benefits was therefore final and
Grant is now foreclosed from contesting liability for the claimant's shoulder
condition.

¶32 Moreover, even if this Court has jurisdiction
at this late date to determine compensability, I find that the claimant
is entitled to compensation.

¶33 Grant's suggestion that the claimant was an independent
contractor is factually unsupported. I need go no further than section
39-71-120(1)(b), MCA (1997-2003), in considering the argument. The cited
subsection requires proof that the claimant was "engaged in an independently
established trade, occupation, profession, or business" in order to be
deemed an independent contractor. Lundberg v. Liberty Northwest Ins.
Corp., 268 Mont. 499, 877 P.2d 156 (1995). There is not a scintilla
of evidence that the claimant was engaged in an independent occupation.
Moreover, exhibits suggest that Grant may have been treating his workers
as independent contractors simply to avoid workers' compensation requirements.
Thus, the defense is unsupported and utterly without merit.

¶34 Similarly, Grant's assertion that the claimant
injured his shoulder in a swimming or water slide accident is unsupported.
The statement he had his foreman write in that regard was essentially
repudiated by the foreman in his testimony at trial. Moreover, the medical
history provided by the claimant long before he filed his workers' compensation
claim is consistent with his testimony that his condition developed as
a result of his work and not while either swimming or water sliding.

¶35 The only evidence concerning causation of the
claimant's right shoulder condition is set out in the March 15, 2001 letter
of Dr. Sherrill. (Ex. 11.) As I note in paragraph 24, the letter could
have better addressed the causation issue, nonetheless it is sufficient
in light of the history provided by claimant to establish, by a preponderance
of the evidence, that he is suffering from an occupational disease that
was due at least in part to his employment at the Cabinet Shop. Where
a physician's opinion is focused on distinguishing between an injury and
an occupational disease, his failure to use precise language regarding
medical certainty or medical probability is not fatal to a reading of
the opinion as finding causation.

¶36 At the close of trial I asked the parties to file
legal briefs as to whether the UEF or Grant bears the initial burden of
production concerning the disputed issues in this case, and which party
bears the ultimate burden of persuasion. In Garcia v. Uninsured Employers'
Fund, 1998 MTWCC 53, I determined that the burden of persuasion rests
on the UEF to prove that the claimant suffered a compensable injury. I
did not address the initial burden of production with respect to the issue
of compensability. Moreover, while my decision in Garcia was
affirmed on appeal, the decision on appeal was a non-citeable decision,
therefore it has no precedential effect and does not preclude my reconsideration
of the matter.(1)

¶37 In considering the burden of persuasion, I note
initially that Grant was required to carry workers' compensation insurance.
His failure to do so put the UEF in the position of an insurer. It is
well established that a workers' compensation insurer is directly liable
for compensation. Its duty is therefore to the claimant, not to its insured.
Therefore, among its duties is the duty to independently analyze each
claim and make an independent decision regarding compensability of the
claim. Indeed, the delegation of the decision concerning compensability
to the employer is per se unreasonable. Hernandez v. National
Union Fire Ins. Co. of Pittsburgh, 2003 MTWCC 5.

¶38 Since the UEF's position is analogous to that
of a worker's compensation insurer, it had a duty to adjust this claim
with similar independence and objectivity. Given that duty, at minimum
the employer bears the burden of producing evidence which, if believed,
would establish that the claim is not compensable. Moreover, given that
duty, I now conclude my decision in Garcia was incorrect and
that the uninsured employer bears the burden of persuasion to prove that
the claim is non-compensable, at least where the claim has been accepted.
To hold otherwise would impede the UEF in objectively and independently
assessing the compensability of a claim.

¶39 The benefits paid by the UEF in this case were
reasonable and supported by the evidence. Pursuant to section 39-71-504,
MCA (1997-2001), the UEF is entitled to judgment for those benefits. The
section provides:

39-71-504. Funding of [Uninsured Employers']
fund -- option for agreement between department and injured employee.
(1) . . . . (b) The [Uninsured Employers'] fund shall collect
from an uninsured employer an amount equal to all benefits paid or to
be paid from the fund to an injured employee of the uninsured employer.

The UEF is therefore entitled to judgment against
Grant for the full amount it had paid to the claimant at the time of trial
- $34,945.74 - and is entitled to an execution for that amount. It is
also entitled to judgment against Grant providing that he is liable for
all permanent partial disability benefits, section 39-72-405, MCA benefits,
rehabilitation benefits, medical benefits, and any other benefits paid
by the UEF to the claimant after the date of the trial so long as the
benefits paid are reasonable.

JUDGMENT

¶40 Judgment is hereby entered against Keith Grant
and in favor of the Uninsured Employers' Fund in the sum of $34,945.75,
which Grant shall pay. The UEF may apply to the Court for an execution
to enforce the judgment.

¶41 Judgment is further entered ordering Keith Grant
to reimburse the UEF for those reasonable benefits it pays after the date
of the trial in this matter, i.e., after January 20, 2004. If he fails
to do so, the UEF may apply to the Court for a determination of any additional
amounts due and upon determining such amounts, a further execution or
executions shall issue.

¶42 This JUDGMENT is certified as final for purposes
of appeal.

¶43 Any party to this dispute
may have twenty days in which to request a rehearing from these Findings
of Fact, Conclusions of Law and Judgment.